Hazy issue of legal cannabis sparks debate among PR pros

All the news lately about the cannabis industry seems to be about growth. Legalization is spreading, and over the past several months, major companies have announced substantial investments in the emerging market.

But the fact that cannabis is still illegal federally presents serious challenges for marketing the product. Cannabis companies can’t buy Google AdWords, and they can’t post on Facebook or Instagram (it also affects banking rules and how vendors such as PR companies are sometimes paid).

It also means some traditional consumer PR tactics are verboten. The federal government has taken a hands-off approach to sales and use in states where cannabis is legal — but not when it comes to transporting it across state lines.

Rosie Mattio, founder of Mattio Communications, which helps cannabis companies build their brands, found that out firsthand.

"We had a client launch a new product, and we had a reporter asking about it," Mattio said. "The reporter really wanted to try the product, but the company is based in Colorado and the reporter is based in New York. She wanted to know its effects and how it works, but we couldn’t ship it to her."

So, Mattio found a workaround: For clients where technology is the product, the company can send the equipment to the reporter, and then they can acquire the cannabis themselves.

That is just one example of an industry that still faces significant challenges — challenges that could be the kinds of opportunities PR pros are ideally suited to tackle.

Business is blooming

There’s no doubt the cannabis business is expanding. Adult or recreational use (there’s a debate over which phrase is preferable; see "An argument over terminology" below) of cannabis is now legal in 10 states and across all of Canada. Proponents of legalizing recreational use in New Jersey are close to securing enough votes, and New York could also pass a legalization bill this session.

This March, CVS announced it would sell CBD products in eight states. And last September, Bloomberg reported that Coca-Cola Co. was in "serious talks" with Aurora Cannabis about a cannabis-infused drink. In the article, Coke declined to comment on the Aurora connection but said it was looking at CBD as an ingredient.

Still, it’s the potential that has people excited. In its chart, the Marijuana Business Daily tracked the sales of medical and recreational cannabis combined, listing them at between $5.8 and $6.6 billion.

According to numbers compiled by the National Cannabis Industry Association, sales of recreational cannabis by itself in 2018 was $6.7 billion. The Marijuna Business Daily chart estimates that total demand for recreational cannabis in the U.S. is between $50 and $55 billion.

For an industry seemingly on the verge of taking off, cannabis struggles with its self image, finding itself caught between an emerging health and wellness positioning and its obvious appeal as an intoxicant and historic connections to the drug culture.

It is precisely those challenges that offer themselves as potential opportunities for PR people whose skill set lives outside the world of traditional marketing and who are used to dealing with multiple stakeholders to tease out corporate narratives.

The legal issues

Despite the buzz (and regardless of the numbers you use), cannabis still has to clear some major hurdles. Foremost among them: It's still classified as a Schedule 1 drug by the U.S government, putting it in the same category as heroin and LSD. The 2018 Farm Bill created some space for hemp and CBD, but even that market is not as open as some are claiming.

And in states where cannabis is legal, the regulatory environment is new and the rules governing how the product can be marketed can shift suddenly and with little warning.

Rosie Mattio, founder of Mattio Communications, a firm specializing in the cannabis industry, is having to come up with creative ways to market her company's clients.

But while some laws close some doors, other laws actually help. A good example are the state laws and regulations addressing the marketing of cannabis.

"If you look at most of the states, they’re going to have restrictions that are pretty robust concerning marketing," said Bridget Hill-Zayat, an attorney with Hoban Law Group. "And a lot of that revolves around children and making sure the audience you’re addressing has a certain percentage of people 21 years old or older."

This amounts to a de facto ban on television and radio advertising and, sometimes, billboards. In fact, in some states, Hill-Zayat said, regulators have attempted to ban all advertising.

And when you combine state advertising bans with social media blackouts, the power of PR grows.

"You can get a big boost from any media wins you get," Mattio said. "So that’s become a real opportunity for PR firms."

The above map shows where cannabis is legal for adult use, medicinal use and limited medicinal use. The dark gray states indicate where cannabis is still illegal. Click image to enlarge. (image courtesy of the National Cannabis Industry Association)

But PR firms must be flexible, Hill-Zayat said, because state regulators are mercurial and the rules governing products and marketing can change significantly, sometimes with little notice.

"The rules are determined by the state commissions," she said. "They can decide to change a rule and can be a little bit capricious about how they do it. Sometimes they’re very targeted in what they’re doing when trying to solve a problem and they don’t appreciate the ramifications. It makes it extremely difficult for these licensees to promote their businesses."

Mattio learned that the hard way.

"There was a company I worked with in Washington, and the regulators had gone back and forth over whether you could make gummies or not and if you can make jellies that might look like candy for a child," she said.

Mattio’s firm spent months working on the campaign only to find out the product category had been banned.

Cannabis growing pains

As legalization spreads and money comes pouring into the space, the personality of the cannabis industry is changing.

"I would characterize the cannabis industry now as 75% professionals who are entrepreneurs and opportunists using it to make money," Eichler said. "They don’t use the product or barely ever use the product."

The top five PR firms and cannabis

With major brands like Altria, Constellation and even CVS entering the cannabis space, you would expect the major PR firms to be hot on their heels. And you would be wrong.

Edelman: Not doing any cannabis-related work, but a spokesperson said, "In regions where it is legal, we are exploring opportunities."

Weber Shandwick: A spokesperson said the agency is not working on any cannabis-related projects.

BCW: On March 26, BCW announced it was formally launching a consulting unit dedicated to the global cannabis and hemp industry. According to Chris Foster, BCW’s North American president, the agency has been working with clients in the cannabis space for more than a year. It started gathering talent for the group roughly a year ago, but only formally launched it in March.

The group is involved with research, data and analytics, federal policy and grassroots engagement for cannabis companies.

In the fall of 2018, BCW released the Cannabis Culture Poll, which examined public views on cannabis and its usage to determine general habits and behaviors of those who use cannabis and those who do not.

FleishmanHillard: A spokesperson said the agency doesn’t "currently [do] any cannabis work or have an official point of view on the industry."

Ketchum: A Ketchum spokeswoman said the agency is "closely monitoring the cannabis industry and its evolving regulatory environment. It’s an interesting new category that could have tremendous potential for marketers."

Cory Ziskind is a senior VP at ICR, a strategic comms firm that has helped cannabis companies go public. He’s seeing C-suite talent from around the business world move into cannabis.

"They’re coming from every sector, certainly from the food and beverage sector and retail sectors," Ziskind said. "They are people that have built successful retail businesses in the past and/or CPG execs that have built consumer brands."

William "Beau" Wrigley Jr. is a good example of that. The former CEO of Wrigley was recently named CEO of Surterra Wellness, one of the original cannabis licence holders in Florida. Surterra also has an operation in Texas and plans to acquire operations in Nevada and Massachusetts, said Andrew Smith, Surterra’s SVP of external affairs.

"We’re also looking to enter into the California market in the next several months," he said.

In addition to bringing on high-profile CPG talent, Surterra is an example of another cannabis trend — companies trying to distance themselves from the stoner stereotype.

When he speaks about messaging, Smith admits there’s no denying cannabis’ drug culture roots, but he says the future of the product is in the health and wellness space.

"We see that as the long-term arc," he said. "You will always see the recreational use out there, but we definitely think the growing population of cannabis users will be in the health and wellness side."

Eichler says the trend is inevitable and understandable but also overplayed.

"They don’t want to depict the business as the old-fashioned stoner sitting on the couch, and rightfully so. But what’s fascinating to me is that the advocacy for this drug, this product, this plant, happened over the last 30 years from people commonly referred to as stoners," he said.

"The stoner stereotype is not a good thing, but there’s definitely been an overcorrection in the zeitgeist of the industry, if they think the foundation of cannabis use doesn’t remain people who love this flower."

Morgan Fox, media relations director for the trade group the National Cannabis Industry Association, suggests there’s room for both narratives.

"Traditional cannabis culture may seem like it is going away, but I think that the people who respond to that kind of branding direction are not turned off by the addition of different perspectives on cannabis consumers that are more inclusive," he said.

"A lot of this is just the result of consumers who don't identify with 'stoner' culture being more open about their cannabis use, and the cannabis industry recognizing that and responding. In general, this shift has been good for the industry and has helped drive policy change by alleviating some of the stigma associated with cannabis consumers."

But whether it’s a medically positioned company or one focused on intoxication, Bloom says there’s most definitely a need for sage comms advice.

"What I have seen, from both the medical and recreational side, is the ‘trying to be everything to everybody’ scenario," Bloom said.

"I do think there are certain people in the industry who are well intentioned but a little overexuberant about the reach and benefit of any product. And, like in any industry, the comm counsel’s role is to dial it back and focus on the needs of the audience."

An argument over terminology

For new or controversial industries, messaging — especially the terms used to describe the base product or service — is instrumental in shaping public perception. It’s the reason casino and gambling companies decided years ago to refer to their business as the gaming, not the gambling, industry.

In the cannabis industry, a debate has grown around whether it is correct to use "recreational" or "adult" to describe the use of the drug.

People adopted the term recreational to draw a distinction between using cannabis to get high and using it to treat a medical condition. But a significant portion of the legalization debate has centered around underage use, leading some people to prefer the term "adult use."

"The term recreation was, from a PR standpoint, just a disaster," said David Eichler, co-founder and creative director of Denver-based Decibel Green, a cannabis marketing and PR firm.

"The term implied that the people behind it were not taking it seriously when it was something kids could be getting access to," he added. "As the cannabis market evolved, the preferred term became adult use because, just like alcohol, it is highly regulated and no responsible cannabis representative advocates kids using it. So, you’re seeing a shift from recreation to adult use. But recreational is gonna stick — that’s the sad part."

David Mack was former head of public affairs for Lyft and is now SVP of policy and public affairs for cannabis startup Eaze, which delivers cannabis in California and hemp-derived CBD products in other states. He believes the only correct term to use is adult.

"The products you can purchase as an adult in legal markets are used for a huge range of purposes, including help with sleep or focus and concentration or anxiety, many of which have nothing to do with recreation," he said.

"So there’s really no good reason to say recreational. You say adult to make it clear that the product is appropriate for adults only and the role of the legal market is to make sure cannabis is only finding its way into adult hands."

But Chris Walsh, president and founding editor of the Marijuana Business Daily, sees things differently.

"We use the word recreation all the time," he said. "We have made the decision to stick with recreational because that’s how people refer to it."

He adds that the concerns over using recreational are overblown.

"You don’t hear consumers say, 'I’m going to an adult-use marijuana store,'" he said. "And it doesn’t seem to be hurting the industry because a growing number of states are legalizing it."

There’s really no good reason to say 'recreational.' You say 'adult' to make it clear that the product is appropriate for adults only and the role of the legal market is to make sure cannabis is only finding its way into adult hands.

David Mack, Eaze

There is also an ongoing debate over whether the preferred term for the product is marijuana or cannabis.

"The science wing will say use cannabis, and the old school people think we should use cannabis and that marijuana is now a bad term. But, in fact, it is widely used," Walsh said.

Ricardo Baca founded Grasslands, a comms agency working the cannabis space, and was previously the Denver Post’s first-ever cannabis editor and went on to found The Cannabist, a Denver Post media brand devoted to the industry. The impetus behind the term cannabis sprang from the drive for legalization.

"In 2013, the industry was trying to rebrand itself and say, 'We are the cannabis industry, not the marijunna industry,'" he said. "At that time, it was fighting the battle of a public stigma. The thinking was, 'Hey, if we change what we call it, maybe we change what happens.'"

Baca said the history of the drug wars and the technically correct terminology also plays a role in the discussion.

"At the Denver Post, we chose to use both interchangeably," he said. "But within the industry, there is a feeling that marijuana has racist connotations [carried over from the war on drugs], and so some were trying to rebrand cannabis as the more botanically correct term. That’s one element of it.

"We embrace both terms, and the more and more we learn, both are accurate from a botanical perspective."

To learn more marijuana terms, visit the The Definitive Cannabis Lexicon, which was created by Baca along with former digital producer of The Cannabist Aleta Labak (now copy chief at Grasslands) and others.